Aussie cashback startup Cashrewards has raised $5.2 million in Series A funding, and after a mammoth year of growth, it’s now gearing up to list on the ASX.
The round was led by Alium Capital Management, and according to Cashrewards founder and executive chairman Andrew Clarke, represents “a solid valuation” for the startup.
The round is Cashrewards’ first batch of equity funding. In April last year, it secured $5.25 million in debt funding from Silicon Valley-based Partners for Growth, after bootstrapping for four years.
Since then, the startup has increased its member numbers from 300,000 to 525,000, and increased its annual revenue figure from $12 million to $20 million, Clarke tells StartupSmart.
Initially, the new funding will be used to invest in marketing, and to further “supercharge” growth, he adds.
“We see the opportunity. The space is hot,” the founder explains.
“It’s about really getting the name out there, becoming a national brand and building trust.”
The startup is also gearing up to go public, with plans to list on the ASX in 2020.
The business is well suited to an IPO, Clarke explains.
“It’s tech, retail, data, it has fast-growth, and it’s also a well-loved consumer brand,” he says.
He also notes we have seen Aussie success stories in a similar space, with buy-now-pay-later startups Zip and Afterpay listing in 2015 and 2016, respectively.
“People are looking around much more for how they can get savings,” Clarke explains.
“It used to be just a small subset of people who were the hardcore coupon cutters. Now, most online shoppers are looking for efficiencies, ways to reduce the cost of a purchase, and the fintechs have given people an alternative,” he adds.
“Our proposition is around trying to encourage millennials to get cash rewards upfront and pay less.”
Clarke himself has never worked in a public company, let alone run one. So, in February, when he started seriously considering the possibility of an imminent IPO, he stepped down as chief executive to become executive chairman.
Former chief financial officer Iain Skelton was promoted to the chief executive position.
“I realised we really needed to become very strong on process and governance, and to that effect, Iain is better placed as chief executive,” Clarke says.
And stepping down from the head of his own startup wasn’t as hard for Clarke as you might imagine.
“I have such confidence in Iain … I have worked with him for three years,” he says.
“If it was someone new it would be really difficult.”
“Everyone’s got an opinion”
Clarke admits he’s made “plenty of mistakes”, but if he has any advice to offer to other founders, he says it’s all about failing fast, and being focused.
“Focus is, as everyone says, just so key,” he says.
“The thing about startups is that there’s so much potential, because you’ve got a blank canvas — it’s really easy to lose focus.”
When it comes to expanding your initial offering, new ideas can become a distraction.
“You have to learn to say ‘no’ more often than you say ‘yes’,” he advises.
“We’ve got 1,000 ideas,” he adds, and people are suggesting new ideas all the time.
“Everyone’s got an opinion.”
The key for Clarke is to analyse and fully scope those ideas before you jump in.
“You can have an idea, but until it’s fully scoped … you can easily make mistakes,” he says.
“It ends up taking so much longer in time and distraction, and it’s a waste of precious money.”
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